Understanding Extended Producer Responsibility (EPR) if you use packaging
Extended Producer Responsibility (EPR) legislation has been on the horizon in the UK for a while. Recently, the UK Government pushed out the date for mandatory reporting to 31st May 2024 and, put a pause on the implementation of fees until 2025.
If your business is eligible for EPR reporting and fees, you should already be taking action to reduce the impact on your business.
In this blog, we will cover a practical guide to Extended Producer Responsibility, including what it is, why it’s being introduced and if it will apply to your business.
What is Extended Producer Responsibility?
Extended Producer Responsibility (EPR) is new legislation being introduced in the UK. At a simplistic level, the regulation will see businesses that put packaging on to the UK market be taxed for creating packaging waste.
Funds raised from the tax will switch the obligation of community waste disposal and recycling costs from local councils to the businesses that supply packaging into UK households.
Why EPR is being introduced?
EPR is being introduced to support the Government’s 25 year environment plan, which seeks to build a greener future.
The strategy includes a package of new legislation to help grow the recycling infrastructure and provide consistency throughout the UK on the types of materials that can be recycled locally. It’s thought that the cost recovered from the taxation will be in the region of £2bn.
Does EPR apply to my business?
The Extended Producer Responsibility legislation is aimed at suppliers of packaging. At face value, you might think: “That doesn’t apply to me, I’m not a packaging company”!
However, the legislation applies to any UK business which imports or supplies packaging into the UK market, which could end up in household waste. So, the tax can apply to online retailers, distributors, manufacturers and even packaging companies like us!
Eligibility for EPR
You will need to take action under EPR legislation if the following apply:
- you’re an individual business, subsidiary or group (but not a charity)
- you have an annual turnover of £1 million or more (based on your most recent annual accounts)
- you were responsible for more than 25 tonnes of packaging in 2022
- you carry out any of the packaging activities defined by the Government
How the legislation will be applied will depend on if you’re classed as a small business or large business.
These are defined by the UK Government as:
Small business – you have an annual turnover of between £1 million and £2 million. You’re responsible for putting onto the market (or importing) more than 25 tonnes of empty packaging or packaged goods in the UK, or your annual turnover is over £1 million. You’re putting or importing between 25 tonnes and 50 tonnes of empty packaging or packaged goods into the UK.
Large business – you have an annual turnover of £2 million or more, and you’re responsible for putting onto the market (or importing) more than 50 tonnes of empty packaging or packaged goods in the UK.
For both classifications, your turnover should be taken from your most recent company accounts. Total packaging weight is calculated on your usage in a calendar year – January to December – of packaging supplied through the UK market, including anything imported and then discarded in the UK.
How EPR applies to small businesses and large businesses
If your company falls into the small business bracket, you will not need to pay a tax under the regulations, BUT you will be eligible to report your packaging use from April 2024.
The UK Government requires that you are already recording data about the empty packaging and packaged goods you supply to UK markets (or import into the UK).
You will be obliged to create an account for your organisation from January 2024. Small businesses will also need to pay a fee to the environmental regulator from 2025.
If you’re classed as a large business, you should also already be recording your packaging data ready for mandatory reporting in October 2023. Plus, you should also expect to pay waste management fees and further charges from 2025.
Modulated fees for large businesses will be paid on a cost per tonne basis, depending on the type of packaging material used.
Whilst these costs have not yet been confirmed, a leading compliance organisations have estimated that these are likely to be in the region of:
- Paper and Board – £221 per tonne
- Plastic – £525 per tonne
This means that if your packaging use of 50 tonnes was split equally between paper and plastic, you could be charged around £18,500 in EPR taxation.
What do I need to do to comply with EPR?
Consider these steps you need to take to comply with EPR include:
- Check if you need to report data, including national data
- Collect your packaging data
- Create an account for your company
- Report your packaging data based on the relevant deadlines
- Pay applicable fees
You may also want to consider working with a third-party compliance partner, who can help you manage your EPR processes.
How can I prepare for the impact of EPR?
To prepare for the impact of EPR, there are some key actions you can take. Here are some tips to get you started:
- Collect detailed information about your packaging materials and their use – data will be an important part of complying with Extended Producer Responsibility. The more detailed information the better.
- Review packaging designs to minimise packaging waste – as EPR will be applied by material weight, reviewing how much packaging you use will be key to mitigating the impact of EPR and the costs associate with it. Reconsidering your packaging designs can help reduce material use and therefore reduce the amount of material you use.
- Consider switching to materials that will attract lower EPR fees – DEFRA is expected to announce modulated fees based on the type of packaging material being used. For example, plastics are expected to be taxed more stringently than paper. Therefore, now is a good time to consideration the materials you’re using for packaging. Could you swap to materials that attract lower fees while maintaining the performance of your packaging?
How Macfarlane Packaging can help with EPR management
EPR is a complex topic but in its simplest form, it’s around driving behaviour in eligible businesses to reduce the amount of packaging used and, ensure that the material used is either recyclable or reusable.
At Macfarlane Packaging we have a wide range of tools to help you prepare for EPR. These include services designed to reduce material usage, therefore, reducing future EPR costs:
- An online e-trading system for easy reporting – we can provide one click reporting on packaging usage, by product, material type and weight. Simplifying the reporting process for our customers.
- Exclusive packaging optimisation software – our industry-first tool, the Packaging Optimiser, can show you what your packaging costs you and the environment – showing financial and CO2 savings of revised packaging solutions.
- State-of-the-art Innovation Labs for developing sustainable solutions – we have two state-of-the-art facilities equipped with packaging design software, sampling machinery and testing equipment to create leading sustainable packaging solutions.
- Extensive eco-friendly packaging range – we have a huge range of packaging materials that are recyclable and contain recycled content to support sustainability goals.
If you are interested in optimising your packaging and reducing the weight of your packaging use, contact us today.